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How bad is the U.0S. job participation rate? Throwing around a few numbers and assuming that the U.S. participation rate stayed steady, analysts calculate that last month's unemployment rate would actually rise to +7.55% instead of falling to Friday’s +7.3%. Smoke and mirrors? Difficult to say, but it certainly gives the perception that everything is on the “up.” What’s even more frightening is that if the participation rate rose in line with U.S. demographics in the past five years, then the actual U.S. unemployment rate would be just shy of +10%!

Friday’s numbers are best describing how “activeness in the U.S. workforce has been key in shifting the country’s labor landscape.” The weaker-than-expected nonfarm payroll report has helped the EUR for the time being. Even Putin’s comments that Russia will continue to sell weapons to Syria (sure to change over time) temporarily added direct pressure to the dollar and favored the safer-haven trade. Despite this market remaining long the dollar, it will be the market's view on when Fed tapering actually occurs and how much, that will have the strongest influence on both the EUR and Emerging Market currency values going forward.

The Syria situation and the U.S. employment fallout are sure to blind the markets until Obama addresses the nation on Tuesday. Less risky trades will favor the EUR, JPY and CHF on pullbacks.

Source: Week In FX Europe - Nonfarm Payroll: Smoke And Mirrors For The EUR?